In 1979, the U.S. Postal Service (“USPS”) began granting postage rate discounts to mailers who shared mail processing and transportation activities with the USPS. According to a recent assessment of worksharing published by the USPS Inspector General (“OIG”), the USPS provided $15 billion in postage rate discounts to large mailers in 2008. These discounts were tied to worksharing arrangements that covered 80% of total mail volume in that year. These arrangements require producers to deliver pre-sorted and labeled mail trays (e.g., trays, tubs, and other mail receptacles) and pallets (e.g., platforms or stackable structures that can support a plurality of trays and/or large mail items/pieces) as close as possible to the final destination Post Office or USPS Distribution Center. The finer the mail sort and the closer to the final destination it is delivered, the greater the discount given to producers by the USPS.
The USPS OIG estimated that these $15 billion in discounts represented reduced costs of only $10.7 billion when the mailers' cost to workshare was considered. Therefore the USPS must address an annual $4.3 billion postage discount deficit, approximately 33% “loss” annually. One method the USPS will use to address the $4.3 billion annual workshare deficit is by addressing workshare failures largely attributed to mail being incorrectly delivered by mailers into the USPS mail stream destinations. The root cause of such induction failures is an operational gap between the physical and digital elements in the mailer production operations. This root cause effectively allows the actual physical mail to differ from the digital files provided to the USPS for postage discounts received on same mail. Prior to 2013, this shortfall was not truly a problem for mailers because the USPS could not identify workshare protocol failures early enough in its sample-based process to clearly identify the mailer as the source of error. The print-to-mail industry currently faces tremendous risks to the $15 billion annual discounts as a result of pending USPS mandates including the Intelligent Mail Barcode (“IMB”), Seamless Acceptance, elnduction, Full-Service, and the Mailer ScoreCard initiatives.
The newly implemented USPS IMB, Mailer ScoreCard, Seamless Acceptance and related systems collectively create unprecedented visibility into the USPS mailstream, and represent the potential loss of billions of dollars annually in postage rate discounts by mailers to which workshare performance failures can now be traced, and from whom unearned postage discounts can now be reclaimed by the USPS. The IMB captures unique identifiers on mail items, mail trays and mail pallets which in conjunction with related USPS initiatives, creates a fundamental change by now providing essentially 100% visibility (was essentially 0%) and real time insight into the quality of mail preparation and compliance with Postal Service requirements. The new mandates and resulting ability of the USPS to track mail item, mail tray and mail pallet quality to individual mailers throughout the mailstream will allow the Postal Service to address the operating losses attributable to underperforming workshare discount programs.
In the 2011 USPS Annual Compliance Determination Report, 62% of the combined First and Standard Class workshare programs were failing, thus providing discounts greater than the costs avoided. The USPS has a new reporting system called the “Mailer Scorecard.” Mailers are now getting scored on how well or poorly they are performing when processing mailings using USPS programs. The Scorecard provides a complete performance summary and mailers can easily view the metrics on a dashboard by logging in through the USPS Business Customer Gateway. Each month, the USPS will use the Scorecard to examine the performance across multiple metrics from the previous calendar month to evaluate whether the established mail quality thresholds are met for each metric. If mail quality thresholds are surpassed, an invoice will be generated as a penalty 10 days after the end of the month. Mailers will have an opportunity to review the invoicing reports and request a review if they feel any of the penalties is a USPS mistake.